Bitcoin surpasses $58,000 in the last 24 hours, following the US inflation data and analysts are wondering what kind of asset it is.
Bitcoin rebounds by more than 4% and reaches $58,000 after a difficult few days. Usually considered a refuge from inflation, many analysts say it will become a kind of digital gold. However, the high volatility of the crypto asset makes it look more like risk assets than the precious metal.
According to data from CryptoQuant, The correlation between BTC and gold has become very negative in recent times. While gold has reached new all-time highs at $2,500 per ounce, the leading cryptocurrency is currently hovering around a 20% below the historical maximum reached in March above US$73,000. Specifically, the negative correlation between both assets stands at -0.40 points in the last 30 days.
On the contrary, The link between Bitcoin and technology stocks has strengthened considerably in recent weeks. In this same time period, CryptoQuant data shows that Bitcoin has a positive correlation of +0.39 points with the Nasdaq index. Yesterday, both cryptos and tech stocks rallied strongly thanks to inflation data that has reinforced the belief that the Federal Reserve (Fed) will lower interest rates by 25 basis points (bp).
In this sense, CryptoQuant strategists highlight that the The current risk-averse environment seems to favour traditional safe haven assets like gold versus bitcoin. This move has occurred while the S&P 500 has fallen by around 3% since August 30. Likewise, the CryptoQuant Bull-Bear Market Cycle Indicator, which measures investor sentiment, has been showing bearish readings since August 27, when BTC was trading above the $60,000 mark.
Bitcoin fell in line with the US dollar
On the other hand, this analysis firm highlights that the MVRV (market value to real value) ratio has also been below its 365-day moving average since August 26. According to these strategists, this scenario suggests that a further price correction could be brewing. According to CryptoQuant, The decline in the price of Bitcoin has also been accompanied by a fall in the US dollar index, another indicator of risk aversion and uncertainty.
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“Most investors consider risk and volatility when allocating across asset classes, and given that bitcoin’s volatility is around 3.7 times that of gold, it would be unrealistic to expect bitcoin to match gold within investors’ portfolios,” JP Morgan analysts explained in a report published in March. The American firm estimates that, to equal gold, Bitcoin should surpass $3.3 trillion in market capitalization, which would mean more than doubling its price.
Source: Ambito
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